5.1 Introduction
Greece has enacted new legislation that revises Law 2331/1995 on money laundering in order to bring it in line with the Second Money Laundering Directive (2MLD) and the FATF Recommendations. The new Law 3424/2005 extends the predicate offences for money laundering to include terrorist financing, trafficking in persons, electronic fraud, and stock market abuse. It also extends the suspicious transaction reporting (STR) requirement to include more professionals such as notaries, lawyers and accountants. In addition, it broadens the powers of the competent authority and clarifies previous legislation by ending a conflict between confidentiality rules and anti-money laundering regulations imposed on banks and financial institutions. The law also provides supervisory authorities with greater authority to block transactions where money laundering is suspected.
5.2 Implementation of First Money Laundering Directive
Greece amended the Penal Code in 1993 to make money laundering a criminal offence and to amend the banking secrecy legislation. Law 2331/1995 on the Prevention and Combating the Legalisation of Income from Criminal Activities was adopted in 1995. It increased the penalties for money laundering, which now included the seizure and confiscation of property.
5.3 Implementation of Second Money Laundering Directive
Directive 2001/97/EC was finally implemented by Greece nearly four years after its adoption, and some two and a half years after the deadline for implementation. On 12 December 2005, the Greek Parliament adopted Law 3424/2005 with the title “Amendments, additions and replacements of provisions of Law 2331/1995 and adaptation of the Hellenic Legislation to Directive 2001/97/EC of the European Parliament and of the Council on prevention of the use of the financial system for the purpose of money laundering and other provisions.”
Law 3424 brings national law on the one hand into line with 2MLD, which amends Directive 91/308/EEC, as well as the Council Framework Decision 2001/500/JHA, and on the other with five special recommendations of the Financial Action Task Force (FATF). It amended the provisions of Law 2331/1995 “Prevention and Suppression of Money Laundering”. The most important novelties include the following:
(a) the category of “serious crimes” is significantly broadened – money laundering of which is punishable initially as a felony – to include offences that generate “substantial proceeds” amounting at least to €15,000, even if they are not punishable by a “severe sentence of imprisonment”;122
*This chapter was written by Dr. Yannis V. Avgerinos, Teaching Fellow, Democritus University of Thrace, Partner, Avgerinos and Partners.
(b) the obligation to report suspicious transactions also extends beyond credit and financial institutions.123 In this case, it is noted that the penalties for deliberate breach of the reporting requirement do not constitute an “evidently inappropriate to the pursued intent” measure, that would violate the EU and constitutional principle of proportionality. Besides, when a Directive does not impose on Member States the establishment of specific sanctions against offenders of its provisions, it is necessary in any case, that these sanctions are adequate and effective;124
(c) the competent authority of Article 7 of Law 2331 is upgraded to an Independent Administrative Authority with increased competencies.
5.4 Institutions Covered
The scope of the implementing Law 3424 follows more or less the scope of 2MLD. In particular, Article 4 of Law 3424 inserts new Article 2a of Law 2331, which extends the obligations laid down in Law 3424 to:
5.4.1 Banks and financial institutions
a) Credit institutions are defined in Article 2(2) as those involved in the activity of acceptance of deposits from the public or other returnable funds and granting of credits for its own account. Electronic money institutions, as defined by article 2(16) of Law 2076/1992,125 as well as the branch or a representative office in Greece of a credit
institution situated abroad are also covered.126 Multiple branches in the country of the
same foreign credit institution are considered as a single credit institution. The Post Savings Bank, the Consignations and Loans Fund and the Central Bank of Greece are also defined as credit institutions.
b) Financial institutions are defined in Article 2(3). Law 3424 undertakings other than credit institutions whose principal activity127 is to invest in securities128 or to carry out one
or more of the operations included in sections b to l of article 24 of Law 2076/1992, as well as the following:
• collective investment undertakings;
• investment firms;
• investment mediation or advice firms; • currency exchange offices;
• money transmission/remittance offices;
• branches of financial institutions located in Greece whose head office is abroad (within or without the EU);129
• insurance companies insofar as they provide life insurance services;
123 Article 1(5) of 2 MLD.
124 See ECJ Case 14/83 von Colson v Land Nordrhein-Westfalen [1984] ECR-1891. 125 Law 2076/1992 introduced into Greek law the Second Banking Directive 89/646/EEC.
126 It thus seems that Law 3424 does not cover services business carried on in Greece with Greek
customers by non – Greek credit and financial institutions, which do not have an establishment in Greece.
127 As opposed to the phrase “which carries out one of the activities” included in Article 3(2)(a) of the Third
Money Laundering Directive.
128 This definition is not included in the Second Money Laundering Directive. 129 See note 126 above.
• leasing companies;
• factoring companies;
• venture capital companies; and
• post offices and companies, only when they participate or mediate in money transmission.130
5.4.2 Professionals
The following professionals are brought within the scope of the anti-money laundering legislation for the first time:
• auditors, external accountants and auditing houses; • tax advisors; and
• notaries and lawyers131 when they participate or assist in the planning or execution of
transactions for their client concerning the buying and selling or real property or business entities, the managing of client money, securities or other assets, the opening or management of bank, saving or securities accounts, the organisation of contributions necessary for the creation, operation or management of companies, or the creation, operation or management of trusts, companies or similar structures or when they act on behalf of and for their clients in any financial or real estate transactions.
5.4.3 Others
In accordance with 2MLD, the following are also brought within the scope of the legislation:
• casinos, internet casinos and betting companies;132
• auctioneers and auction companies;
• dealers in high-value goods, whenever payment is made in cash or in instalments and in an amount of €15,000 or more;133 and
• real estate agents.
5.5 Identification of Customers
The applicable requirements for identification and verification of the identity of customers introduced by Law 3424 do not differ substantially from the previous legislation and are consistent with 2MLD. The distinction between face-to-face and non face-to-face business continues to apply, while new provisions regulate electronic or cross-border transactions.
130 Post companies are not explicitly within the scope of the Second Money Laundering Directive. The
definition, however, of “financial institutions” in Article 1(1)(B) includes “money transmission/remittance offices”.
131 Law 3424 refers merely to “lawyers” (dikigoroi) in contrast to the Second Money Laundering Directive,
which extends application to “other independent legal professionals” (Article 1(2)(5)). Law 3424 does not define “notaries” or “lawyers”, or whether they should belong to professional bodies, since Greek law obliges all legal professionals to be members of professional bodies such as bar associations.
132 The Second Money Laundering Directive generally refers to “casinos”.
133 Here Law 3424 goes beyond the Second Money Laundering Directive, which only refers to payment in
5.5.1 Verification of identity
With regard to face-to-face business, the provisions of Law 2331 (Article 4) remain untouched: “credit institutions and financial institutions must, during the conclusion of contracts, while conducting any business activity and especially during the opening of a deposit account of any nature, during the conclusion of a contract for the safekeeping of property assets and for the leasing of a treasury compartment, as well as during the conclusion of a contract of a mortgaged loan, obtain evidence of the identity of the contracting or the transacting person. For the evidence, a police identity card or a passport or another official document is required. This obligation exists for every transaction, apart from the ones mentioned above herewith, the amount of which is equal in Drachmas to at least [€15,000], either performed with one transaction or by more, which take place in the same day or refer to the same legal relationship. If the amount is not known during the time of transaction, the credit institution or the financial organisation verifies the identity as soon as it is informed about the amount or finds out that it amounts to a sum of Drachmas equal to at least [€15,000]”.134
Finally, according to Article 4(6), “identification is also required in any case where there is a serious suspicion about legalisation of income derived from criminal activity”.
The above-mentioned requirements apply to both natural and legal persons. Especially, however, for corporate customers, Law 3424 delegates power to legislate for the necessary identification requirements to the Minister of Economy and related Ministers with regulatory and supervisory functions. As a result Ministerial Decisions will lay down the procedures for combating money laundering, including the keeping of relevant establishment records and the requirement to transact business through credit institutions.135
5.5.2 Non face-to-face business
Articles 5(1) and (2) of Law 3424 add new provisions to Article 4(1) and (7) of Law 2331 in relation to non face-to-face business and especially electronic and cross-border money transfers. In particular, Article 5(1) provides that for electronic money transfers, the competent authorities may apply the requirements for identification and verification of identity to transactions that are equal to less than €15,000. The relevant institutions or persons, however, may apply less stringent requirements to the execution of these transactions, such as a simple verification by documents or electronic messages in hand.
In addition, Article 5(2), which adds new paragraphs to Article 4(7) of Law 2331,136
includes new provisions that relate to cross-border electronic money transfers. In particular, the institutions and persons of Article 2a that receive orders for cross-border money transfers shall include in the relevant messages the name, address and the bank account number of their client. For money transfers that take place within the country,
134 Article 4(1) of Law 2331/1995. 135 Article 4(4) of Law 3424.
136 It would perhaps be preferable to add these paragraphs to paragraph 1 of Article 4 of Law 2331, with
the competent authorities may designate the specific information that has to be included in the relevant electronic messages.
Finally, there are no particular identification requirements applicable to Internet or telephone banking or the provision of financial services by Greek or non-Greek institutions. Nevertheless, credit and financial institutions are required, in particular: (a) to examine with special attention every transaction, which, because of its nature or the identity of the client, may be connected with money laundering or terrorist organisations;137
(b) to take into consideration the whole portfolio of the client in order to assess whether a transaction is unusual;
(c) to ensure that these requirements are also applied to their subsidiaries and branches abroad, unless this is prohibited by the relevant foreign legislation; and
(d) to take every other measure required by the competent authority for the avoidance of criminal activity, including refusal to proceed with the transaction where the aforementioned requirements have not been met by the client.
5.5.3 Exceptions
Exemptions introduced by Articles 4(4) and (5) relating to insurance business and state- owned companies or organisations remain. The exemptions in respect of life insurance contracts and insurance policies in respect of pension schemes are fully in line with the exemptions allowed under Article 1(3) (3) and (4) of 2MLD.
Credit institutions and financial institutions may use their discretion, but they are not obliged to follow the identification requirements, when the contracting party is a credit institution, a financial organisation, a legal person under public law or an organisation which is at least 51% owned by the State.138
Neither Law 2331 nor Law 3424, however, has included the relevant exemption for third country customers under Article 1(3)(9) of 2MLD.139 Beyond that, the implementing law
has also failed to make reference to the exemption provided in respect of casinos.140 For
non face-to-face business transactions the above-mentioned requirements are waived: (a) for messages ordering money transfers between credit and/or financial institutions
for their own account; and
(b) for commercial transactions that have been executed with the use of credit or debit cards, if the number of the card is included in the message.
137 Article 5(3) of Law 3424. 138 Article 4(5), op.cit.
139 Article 1(3) (9) provides that “the institutions and persons subject to this Directive shall not be subject to
the identification requirements provided for in this Article where the customer is a credit or financial institution covered by this Directive or a credit or financial institution situated in a third country situated in a third country which imposes, in the opinion of the relevant Member States, equivalent requirements to those laid down by this Directive.”
140 Articles 1(3)(5) and (6) state that: “By way of derogation from the preceding paragraphs, all casino
customers shall be identified if they purchase or sell gambling chips with a value of €1,000 or more. Casinos subject to State supervision shall be deemed in any event to have complied with the identification requirement laid down in this Directive if they register and identify their customers immediately on entry, regardless of the number of gambling chips purchased.”
5.5.4 Risk-based approach to verification of identity
Article 4(2) of Law 3424 allows the competent authorities to apply different obligations to different institutions and persons, taking into account their financial situation, the nature of their professional activities and the risk that these activities pose in relation to money laundering.
5.5.5 Identification of beneficial owners
The Law states that “If the contracting or transacting person acts for the account of another person, besides the proof of his own identity according to paragraph 1, he must also prove the identity of the third person (whether a natural or legal person) for whom he acts. The credit institution or the financial organisation must also verify such particulars when the contracting or transacting person does not make the previous declaration, but there is reasonable doubt as to whether he is acting on his own account or it is certain that he is acting for the account of another person”.141
Where there is doubt whether the contracting or transacting persons, mentioned in previous paragraphs, act on their own account or where it is certain that they are not acting for their own account, the credit institutions and the financial organisations must take reasonable steps to collect information about the real identity of the persons for whom they are acting.”142
5.6 Definition of Serious Crime
For the definition of “criminal activity” which is now called “commission of serious crime” the previous legislation (Law 2331) provided in Article 1 an exclusive list of 24 basic categories of crimes. Law 3424 reforms this list: it now contains an exclusive list of 16 basic crimes, as well a general category of crimes: “any offence which may generate substantial proceeds of at least €15,000 and which is punishable by a severe sentence of imprisonment of more than six months.” According to Article 2 (1) of Law 3424, in particular, criminal activity constitutes the commission of a serious crime. Serious crimes are:
• criminal organisation (article 187 of Penal Code); • terrorist actions (article 187A of Penal Code);
• terrorist financing, as foreseen in article 187A par. 6 of Penal Code; • passive bribery (article 235 of Penal Code);
• human trafficking (article 323A of Penal Code); • computer fraud (article 386A of Penal Code); • trafficking (article 351 of Penal Code);
• crimes foreseen by the law regarding the traffic of drugs;143
• crimes of Article 15 and 17 of Law 2168/1993 “about weapons et al”;144
141 Article 4(2), op.cit. 142 Article 4(3), op.cit.
• crimes “involving the protection of antiquities”;145 • crimes 146 “involving protection from ion radiation”; • crimes 147 involving immigration;148
• crimes 149 involving “the implementation of the Convention concerning the protection of financial interests of European Communities and the Protocols relating to it”; • bribery of foreign public officials;150
• bribery of European Community or Member-States’ public servants;151 and • market abuse according to the provisions of Law 3340/2005.152
In established case-law,153 the criminal activity from which the property originates, which
is described in Article 2 of the Law (wherewith is replaced case a of Article 1 of Law 2331) “is incidentally investigated by the courts, must not be presumed or conjectured, but must be sufficiently determined and individualised as to the time and its offenders, even if they have not been sentenced on account of it, or the relevant charges have not been pressed against them”. And if the “criminal activity” from which the property originated took place abroad, the activity must also be a criminal offence in the country where it took place, in order to constitute an offence under Article 1 of Law 2331.154
Interestingly, Law 3424 makes no reference to the Strasburg Convention,155 which has
already been implemented by Greek law and, according to Article 28(1) of the Greek Constitution, prevails over any contrary provision of domestic law. According to Article 1(e) of the Convention, “predicate offence" means any criminal offence as a result of which proceeds were generated that may become the subject of an offence as defined in Article 6 of the Convention. Moreover, Article 6(1) states that “each party shall adopt such legislative and other measures as may be necessary to establish as offences under its domestic law, when committed intentionally”, followed by a list of the ways that money laundering can be committed.
144 Law 2168/1993 on matters relating to weapons, ammunition and explosive materials has implemented
Directive 91/477/EEC of 18 June 1991 on control of the acquisition and possession of weapons (OJ No L 256 of 13.09.1991).
145 foreseen by articles 2, 53-55, 61 and 63 of Law 3028/2002 “for the Protection of Antiquities and in
general of the Cultural Heritage”.
146 foreseen by article 8 of Legislative Decree 181/1974 147 foreseen by article 87 par. 5-8 and 88 of Law 3386/2005
148 Law 3386/2005 regulating the “entry, residence and social inclusion of third country nationals in Greek
territory” has implemented Directives 2003/86/EC of 22 September 2003 on the right to family reunification (OJ No 251 of 03 October 2003) and 2003/109/EC of 25 November 2003 concerning the status of third- country nationals who are long-term residents (OJ No 16 of 23 January 2004).
149 foreseen by articles 1-4 and 6 of Law 2803/2000.
150 as foreseen by article 2 of Law 2658/1998 which ratified the Convention on combating of bribery of
foreign officials in international business transactions.
151 as foreseen by articles 3 and 4 of Law 2802/2000 ratified the Convention on the Fight Against Corruption
involving Officials of the European Communities or officials of member states of the EU.
152 Law 3340/2005 has implemented Directive 2003/6/EC of 28 January 2003 on insider dealing and market
manipulation (market abuse) (OJ No 96 of 12.04.2003).
153 Supreme Court 351/2003, unpublished, Chamber of the Supreme Court 372/2002 (2002) Pinikos Logos
291, Chamber of the Supreme Court 478/2000 (2000) Nomiko Vima 1309, Appellate Council for Criminal Indictments of Larissa 50/2004 (2004) Nomiko Vima 1063.
154 See M. Kaiafa – Gbandi, The Criminal Law in the European Union (Athens: Sakkoulas, 2003) 23 and
129, Appellate Council for Criminal Indictments of Larissa 50/2004, op cit.
155 European Convention No 141 on Laundering, Search, Seizure and Confiscation of the proceeds from
According to paragraph 4 of the same Article, “each party may, at the time of signature or when depositing its instrument of ratification, acceptance, approval or accession, by declaration addressed to the Secretary General of the Council of Europe declare that